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Moving averages are popular indicators that traders use to identify whether prices are moving up or down. When the closing price is above a moving average, prices are considered to be in an uptrend. A downtrend is defined when prices close below the moving average.Some traders prefer to anticipate trend reversals and use indicators like the stochastics to find overbought and oversold price levels. The idea is that when prices are oversold, buyers should enter the market and push prices up. Selling is expected to increase after prices become overbought.There are problems with any indicator and no system will ever be foolproof.
This is a part of the world that hasn't really been in the news much. The fund's largest holdings are in Brazil and Mexico, with more than 51% of assets invested in Brazil and 27% in Mexico.What news there is from Brazil seems to be negative, with the International Monetary Fund recently lowering its estimate of economic growth. But if Brazil meets expectations, it would grow at 3%, still faster than the developed economies in North America and Europe. Mexico is also expected to grow at about 3.5%.Despite faster economic growth, the markets are trading at a discount to U.S. stocks. Brazil has a price-to-earnings (P/E) ratio of 13, and Mexico's is 15. ILF could be a bargain if growth meets expectations and P/E ratios rise.The weekly chart shows that this is a relatively low-risk trade. ILF has been in a consolidation pattern that provides a price target of $47.74, about 11% above the current price, within three to six months. The risk can be managed with a stop-loss at $41, the lower edge of the pattern, which is about 4.5% below the current price.
With the possibility of a trend just beginning and a reward-to-risk ratio of almost 2.5-to-1, this trade could be appealing to conservative traders.Recommended Trade Setup:-- Buy ILF at $43 or less-- Set stop-loss at $41-- Set price target at $47.24 for a potential 11% gain in 3-6 months
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